Denmark's Orsted decided to cut its 2030 investment program by 25%, the renewable energy firm said on Wednesday, as the offshore wind industry grapples with rising costs and supply chain issues.
The firm will now invest in the range of 210 billion to 230 billion Danish crowns ($29.32 billion to $32.12 billion) for the period of 2024 to 2030, down from its previous target of 270 billion Danish crowns.
Orsted also withdrew its previously set 2030 target for installed renewable capacity of 35-38 gigawatts, less than a week after replacing its top boss with a company insider Rasmus Errboe.
"We'll reduce our investment programme towards 2030 through a stricter, more value-focused approach to capital allocation. We do this to ensure a stronger balance sheet," Errboe said.
The group has been crucial to establishing a European industry for wind at sea, but the industry has struggled in recent years and now faces challenges from U.S. President Donald Trump, who has raised opposition to wind power.
The cuts will not impact the group's renewable projects under construction, Orsted said, adding that it will be restructuring its workforce and reduce the pace of new construction.
The Danish renewable energy firm has struggled to unleash the potential of the U.S. offshore wind market and been forced to book several impairment charges. The company said on Wednesday its U.S. offshore wind portfolio has led pressure on its credit metric.
The company expects its earnings before interest, taxes, depreciation and amortisation to increase to a range of 29 billion to 33 billion Danish crowns in 2026, excluding new partnerships and cancellation fees.
Orsted's woes reflect the changing fortunes of wind power globally as soaring costs, delays and limited supply chain investment prompt investors to reassess the speed of energy transition.
The firm on Wednesday met its estimates for full-year results and reiterated that it aims to reinstate dividends from 2026.
($1 = 7.1603 Danish crowns)
(Reuters - Reporting by Gursimran Kaur in Bengaluru; Editing by Shailesh Kuber, Vijay Kishore and Maju Samuel)
Subscribe
